PENFOLD PROPERTY LTD

Executive Summary

Penfold Property Ltd operates in property letting with substantial investment property assets but faces significant liquidity challenges due to negative working capital and high short-term liabilities. The company is highly leveraged with minimal equity, relying on stable rental income and creditor support to service debt. Credit approval is conditional on continued rental income stability, management of short-term cash flow, and monitoring of related-party loans and property valuations.

PENFOLD PROPERTY LTD - Analysis Report

Company Number: 13305714

Analysis Date: 2025-07-20 13:50 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Penfold Property Ltd shows significant asset backing through investment property valued at £1.69 million, but the company’s liquidity position is weak with current liabilities (£1,001,397) heavily exceeding current assets (£65,299 cash only). The net current assets are deeply negative (-£936,098), indicating potential short-term cash flow stress. The company is highly leveraged with long-term bank loans (£750,536) secured against the property. Given the nature of its business (real estate letting) and asset backing, the company may service its obligations if rental income is stable and sufficient. However, the high short-term creditor balances and negative working capital require close monitoring and possibly additional liquidity support. Approval is conditional on continued rental income stability, no deterioration in property values, and management’s ability to manage short-term cash demands.

2. Financial Strength:
   The balance sheet shows fixed assets (investment property) of £1.69m, which is stable and unchanged from prior year, and total net assets of £1 (effectively zero equity). The company carries substantial debt secured by a first charge on the property. Shareholders’ funds are nominal (£2 share capital), reflecting minimal equity. The company is highly leveraged with total liabilities exceeding assets when considering short-term balances. The negative net current assets reflect potential liquidity risk. Overall, financial strength depends heavily on the recoverability and valuation of the investment property and the ability to refinance or service the long-term debt.

3. Cash Flow Assessment:
   Cash at year-end increased modestly to £65,299 but remains insufficient to cover current liabilities of over £1m. The company’s operations are property letting, so rental income should be the main cash inflow; however, the accounts do not disclose turnover or profitability. The large short-term creditor balance includes a related-party loan (£973,096) with no interest charged and no indication of repayment terms, which may be supporting liquidity. Working capital is severely negative, posing a risk of short-term funding gaps. The absence of audit and detailed P&L limits visibility on operating cash flow. The company’s ability to meet short-term obligations depends on rental collection, creditor terms, and possible related-party financial support.

4. Monitoring Points:

• Rental income consistency and arrears
• Revaluation or impairment of investment property
• Changes in short-term creditor balances, especially related-party loans
• Cash flow trends and liquidity position quarterly
• Debt refinancing or restructuring plans
• Directors’ engagement and any changes in management or control
• Timely filing of accounts and confirmation statements to ensure compliance